Texas Employers' Insurance Association v. Leroy Jackson

820 F.2d 1406
Court of Appeals for the Fifth Circuit·Decided September 8, 1987·No. 85-2583, 85-2690·Published·Cited by 55 cases

Opinions

JOHN R. BROWN, Circuit Judge:

This case lies at the point where federalism and the Anti-Injunction Act intersect with preemption and the Declaratory Judgment Act. The question is whether the Longshore and Harbor Workers Compensation Act (LHWCA) preempts a state law cause of action for the bad faith withholding of compensation benefits. We affirm the District Court’s declaratory judgment that the LHWCA is preemptive, but reverse the injunction staying the state court proceedings.

A Tale of Two Lawsuits

Appellant Leroy Jackson, an employee covered by the LHWCA, 33 U.S.C. §§ 901-950, injured his back and right ankle on July 12, 1978 while in the employ of Gulf-port Shipbuilding Company in Port Arthur, Texas. Jackson received medical treatment and returned to work on October 30 of that year. During the following three and one-half years, Jackson continued at his shipfitting duties but occasional recurring bouts of back pain related to his July 1978 accident forced him periodically to seek additional medical treatment. Four times between October 1978 and May 1982, Jackson received medical treatment for his back condition and was absent from work for periods ranging from about six to about fifteen weeks.

At the time of Jackson’s injury, Gulfport Shipbuilding was an employer subject to the LHWCA. As Gulfport’s LHWCA carrier, Texas Employers’ Insurance Association (TEIA) paid for Jackson’s medical treatment and paid him temporary total disability benefits during those periods when Jackson was unable to work.

On May 3, 1982, Jackson seriously reinjured his back while at work and has not returned to work since. On July 6, 1982, Jackson filed a formal claim for permanent disability benefits. See 33 U.S.C. § 908. Shortly thereafter, on July 23, TEIA filed [1410]*1410the first of several formal controversions,1 this one on the basis that Jackson had not yet reached maximum medical improvement, and thus it was unknown whether his disability would indeed be permanent. Despite its filing of the controversion, TEIA did not suspend payment of Jackson’s benefits until April 4, 1983.

On July 6, 1983, in an informal conference before the Deputy Commissioner, TEIA agreed to, and did, resume Jackson’s payments. Jackson was re-examined by a physician in mid-August 1983, and on September 14, TEIA again filed a controversion and suspended Jackson’s benefits, this time on the stated basis that Jackson’s disability was due to a continuing arthritic condition and not the result of his 1978 back injury. On September 28, 1983, a second informal conference was held, this time before a Claims Examiner. The next day, September 29, TEIA filed a third controversion, here challenging the Claims Examiner’s recommendation for payment of compensation. As provided under the Act, 33 U.S.C. § 919, Jackson’s claim went to a formal hearing before an AU on May 3, 1984.

Jackson Goes to the State Court

On June 5,1984, while the decision of the AU was pending, Jackson filed a lawsuit against TEIA2 in Texas state court. Jackson’s original petition contained seven causes of action generally alleging bad faith insurance practices on the part of TEIA, and it requested $1.5 million in actual damages and $15 million in punitive damages. TEIA answered the lawsuit, and extensive discovery ensued.

On September 14, 1984, the AU who heard Jackson’s claim issued a final decision and order declaring Jackson to be totally and permanently disabled and ordered payment of compensation benefits, attorney’s fees, and interest on all past unpaid amounts. Neither party appealed the ALJ’s decision and the order became final. See 33 U.S.C. § 921.

Even though the AU had decided his claim favorably, Jackson nevertheless pressed on with the state court case. In January 1985, the state trial court denied TEIA’s plea in bar, which had asserted that Jackson’s state claims were barred by the exclusivity provisions of the LHWCA.

TEIA Goes to the Federal Court

In June 1985, TEIA filed the instant suit in federal district court. TEIA sought two declaratory judgments: (i) the LHWCA preempted Jackson’s state bad faith insurance practices action and (ii) the AU’s decision was res judicata with respect to Jackson’s challenge to the manner in which TEIA handled his LHWCA claim. TEIA also sought an injunction prohibiting Jackson from proceeding with his state action. In August 1985, the District Court enjoined Jackson from further proceeding in state court. In September 1985, the District Court entered a subsequent order, permanently enjoining Jackson from prosecuting his state court suit and declaring that the LHWCA preempts the state law causes of action arising from the handling of compensation payments under the Act. 618 F.Supp. 1316 (E.D.Tex.1985). The state trial remains stayed. Jackson appeals.

[1411]*1411 The Preeminence of Preemption

We first consider whether Jackson’s state law claims are preempted by the LHWCA. Federal law will be found to preempt state law in three different instances. First, Congress may explicitly express its intent to preempt state law. Shaw v. Delta Air Lines, 463 U.S. 85, 95, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490, 500 (1983). Second, Congress’ intent to displace state law may be inferred, generally through the comprehensiveness or pervasiveness of the federal regulatory scheme. Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146,1152, 91 L.Ed. 1447, 1459 (1947). Finally, even where Congress has not entirely displaced state law, federal law will nevertheless preempt state law when state law conflicts with federal law, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248, 257 (1963), or when state law interferes with the accomplishment and execution of the congressional purpose, Hines v. Davidowitz, 312 U.S. 52, 67-68, 61 S.Ct. 399, 404, 85 L.Ed. 581, 587 (1941). See Michigan Canners & Freezers Ass’n v. Agricultural Marketing & Bargaining Bd., 467 U.S. 461, 469, 104 S.Ct. 2518, 2523, 81 L.Ed.2d 399, 406 (1984) (summarizing three types of preemption). Although any one of these three bases would be sufficient to establish preemption, we agree with the District Court that, on all of these bases, the LHWCA preempts the Texas state law invoked by Jackson.

(i) Congressional Intent to Preempt

With respect to explicit congressional intent to preempt state law, we look to § 5(a) of the Act, 33 U.S.C. § 905

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